Hong Kong: Chief Executives Annual Policy Address January 2014

Hong Kong: Chief Executive’s Annual Policy Address – January 2014

British Consulate General Hong Kong

Summary

Chief Executive’s relatively well received second policy address majors on poverty alleviation, social mobility and land supply, while insisting economic development remains paramount. Economic policies focused on infrastructure and exploiting economic integration with the Mainland. Poverty measures substantial by Hong Kong standards, but look affordable.

Detail

On 15 January, Chief Executive C Y Leung gave his second Policy Address: “Support the Needy, Let Youth Flourish, Unleash Hong Kong’s Potential” [document available at http://www.policyaddress.gov.hk/2014/eng/pdf/PA2014.pdf].

Leung majored on poverty alleviation and social mobility, announcing a means tested Low Income Working Family Allowance indexed to employment as part of a HKD 3 billion package designed to “encourage young people and adults to become self-reliant through employment, while putting in place a reasonable and sustainable social security and welfare system to help those who cannot provide for themselves”.  At face value the proposals look both affordable and sustainable in at least the medium term: although the HKD 10bn (£790m) estimate of the entire new welfare package represents a 23% increase to the welfare Budget, it only amounts to 13% of the annual budget surplus.

Economic announcements were set in the context of the Third Plenum commitment to liberalise trade in goods and services between the Mainland and Hong Kong by 2017.  Initiatives include new mainland offices and a renewed commitment to establish a Free Trade Zone between Hong Kong and Guangdong – an area with 100m inhabitants and GDP per capita of double the national rate. Hong Kong will also open negotiations on a Hong Kong-ASEAN Free Trade Agreement.

Housing also featured heavily, a total of 470,000 new houses are to be provided in the coming ten years, public housing accounting for 60%: a 36% increase on last year’s pledge.

On land development, the Chief Executive set out an ambitious vision for Lantau Island, the site of Hong Kong International Airport, linking Hong Kong Island, Kowloon, the New Territories and the Western Pearl River Delta when major transport infrastructure projects, including the Hong Kong-Zhuhai-Macao Bridge, are completed in 2018. A Lantau Development Advisory Committee will exploit the area’s value as a “bridgehead economy”.

On transport, a new railway development plan for post 2020 projects is imminent, with green transport measures including electrical vehicles.

On the environment Leung highlighted progress against last year’s action plan on air quality and waste management. He said the Government had earmarked HKD 1 billion to launch a Recycling Fund and restated its intention to launch a public consultation on the future fuel mix. 

Given the ongoing public consultation, on constitutional reform, the speech mentioned upholding the core values of Hong Kong, including “freedom and democracy”.

Comment

The long term commitments on poverty alleviation amount, by Hong Kong’s free market standards, to an extensive social welfare package. 

While press coverage talked of a ‘spending spree’, our initial assessment is that measures will still leave the government with a healthy budget surplus.

 

 

Disclaimer

The purpose of the FCO Country Update(s) for Business (”the Report”) prepared by UK Trade & Investment (UKTI) is to provide information and related comment to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.

Countries: Hong Kong
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